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Five Trends for Manufacturing's Fourth Wave

Today’s global business leaders are watching traditional product categories fall away. Companies are entering new lines of business they never imagined just a few years ago, and to support such measures, they are radically changing their means of production.

Welcome to Industry 4.0, a term coined in 2011 by Henning Kagermann, the head of the German Academy of Science and Engineering. The first industrial revolution occurred in the late 1700s, the second during the early 20th century, and the third after World War II. This new fourth wave is powered by advancements that include smart manufacturing, robotics, artificial intelligence, and the Internet of Things. It propels industry leaders to work more efficiently while giving product designers more control.

At the same time, this shift will drive the need for smart automation further, says François Barbier, president of Global Operations and Components at Flex, a global design, engineering, and manufacturing leader. Flex knows firsthand how companies are adopting IoT solutions. “Think about what we’ve seen over the last 150 years with the three industrial revolutions. Everything is now produced better, faster, and with higher quality,” Barbier says. “Compare the first car to the cars we have right now. That higher quality drives more demand, more consumption, more work for people, and more work in the world.”

Not since the advent of the computer have we seen such an overhaul in how mass production is managed. In Industry 4.0, “computers and automation will come together in an entirely new way, with robotics connected remotely to computer systems equipped with machine-learning algorithms that can learn and control the robotics with very little input from human operators,” big data guru Bernard Marr wrote in Forbes. “Industry 4.0 introduces what has been called the ‘smart factory,’ in which cyberphysical systems monitor the physical processes of the factory and make decentralized decisions.”

All over the world, from automobiles to consumer goods to chemicals, integrating the IoT into manufacturing is not only under way but already proving to be cost-effective. According to a survey conducted by Tata Consultancy Services, industrial manufacturers that utilized IoT solutions in 2014 saw an average 28.5% increase in revenue over 2013. Innovations such as robotics, artificial intelligence, intelligent sensors, cloud computing, and data analytics are increasing efficiency and mass customization. A feature in Strategy + Business described how the system works: “Under the Industry 4.0 model, product design and development take place in simulated laboratories and utilize digital fabrication models. The products themselves take tangible form only after most of the design and engineering problems have been worked out. The networks of machinery that have engendered industrial society become hyperaware systems of highly flexible technology, responding rapidly not just to human commands but to their own perceptions and self-direction.”

Global companies such as Epson, General Motors, IBM, Intel, Lockheed Martin, and Microsoft are all investing in making their manufacturing more intelligent. According to a report from BI Intelligence, the 237 million smart devices that have been in use since 2015 are expected to increase to 923 million by 2020, with manufacturers projected to spend $267 billion on the IoT that same year. While the current supply chain system consists of several steps—marketing, product development, manufacturing, and distribution—that occur independent of one another, smart manufacturing could streamline the time, effort, and communication between each step, creating faster and more reliable service.

Of course, for many companies, operating in this new paradigm will require support. “The way we are designing products today and the way we are getting information from our customers have changed dramatically. The data that informs how we design our products can be much more or much less prescriptive depending on the customer,” Barbier says. He explains that Flex still has traditional customers who are very prescriptive—Cisco, HP, and Nokia, which detail everything they want, including product design. Flex then offers these companies the service of making those products and materials, and delivers those products to customers. “But now we have a new set of customers coming to us with a sketch of a product idea. They’re asking Flex to design it. For us, this is driving a need for new ways of working, new processes in the manufacturing space.”

So what skills must manufacturing leaders possess to find success in Industry 4.0?

1. Seeing Around Corners—in 360°

New tools allow companies to create and test situations in the virtual world. They can simulate the design process and the assembly line before an actual product is created. Given that ability to transform design and production, virtual reality is being adopted by more companies. Simulating the product-creation phase helps cut down on manufacturing time, and that means companies are able to get a more realistic version of what they want. Ford Motor Company and BAE Systems have each been experimenting with VR technology. Ford is using it to simulate how people interact with their vehicles while BAE Systems has adopted it for planning the construction of its submarines. Similarly, augmented reality tools are also proving to be important during manufacturing. Using Atheer’s smart AiR Glasses that overlay digital information, for example, can provide invaluable connectivity and support for operations, maintenance, and training. Flex is utilizing similar augmented reality solutions for technical remote assistance, which allows users in distant locations to connect with each other through a live view. This enables an engineer in China to consult with an engineer in the U.S. on a technical issue and receive feedback in real time through wearable AR glasses. This immediate technical support comes without the need to send someone on a plane, significantly cutting down on travel costs. Last year, CIO magazine reported that Boeing’s use of Google Glass in a pilot project reduced the assembly time on complex wire production by 25% and cut error rates in half.

2. Viewing the Fourth Wave—in 3-D

Also making a mark in the manufacturing world is 3-D printing, which allows for the seamless creation of tangible products using a single machine. Barbier says that this is “a fundamental change, because if you’re adding material, that gives you a lot more possibilities for how you design the part. For a certain category of product where you would normally need six pieces, 3-D printing can achieve the same thing in one piece without any additional processes like welding or screwing.” Three dimensional printing can also reduce waste by recycling plastic and cut down on the wait time for replacement parts and transportation. Its implications for mass production are varied, making advancements possible in products ranging from toys to medical devices. In addition to these consolidation and scrap benefits, additive manufacturing also offers many other benefits, including precision material placement, significant time and cost savings, and the ability to decentralize the manufacturing of basic parts by providing services closer to end markets. These benefits allow for a vertically integrated supply chain in Flex’s operations.

3. Advanced Manufacturing—on Autopilot

Automation is another vital aspect of the industry’s future. According to Barbier, a significant portion of Flex’s manufacturing processes are already fully automated. For Flex, automation means creating products with the kind of accuracy and stamina that humans can’t provide—and doing so in environments that would be considered unsafe for humans. The new generation of robotics is not only much easier to program, but is also more user-friendly than ever and, with such capabilities as voice or image recognition, can work with humans and re-create complex human tasks. These plug-and-play type of robots “are becoming easier to use and much more collaborative,” says Barbier. “Robots are just going to do what you ask them to do—nothing more, nothing less. Right now, a lot of new technologies are based on tactical sensors or optical sensors or X-ray sensors. These things are preventing accidents because the robots are able to see, or sense, if I’m touching it and know to stop. The good news is now we can increasingly integrate robotics into production lines alongside human beings.”

These human-machine interfaces, or HMIs, provide feedback on worker safety and simple performance issues. IBM is one company that has already seen the benefit of HMIs. Last year, on its Internet of Things blog, the company reported, “If a robot stops working, the HMI can show us instantly where the robot is located and what might have gone wrong, and remotely switch off power to the robot so that it is safe to approach. Video linking to supporting engineers enables users to share and annotate documentation to collaboratively pinpoint what needs examining, reducing costly downtime.”

New robots that are more agile, skilled, cheaper, and safer could decrease labor costs, bringing manufacturing processes back to the United States and other high-wage countries from Mexico and China, The Wall Street Journal reported. “The latest [robot] models entering factories and being developed in labs are a different breed. They can work alongside humans without endangering them and help assemble all sorts of objects, as large as aircraft engines and as small and delicate as smartphones. Soon, some should be easy enough to program and deploy that they will no longer need expert overseers.”

4. Building Intelligent Factories—in the Cloud

Beyond robotics, AR, and VR, factories are becoming more savvy with cloud computing and smart sensors, retrofitting older equipment with the latter and installing them in newer machines. These kinds of sensors can perform tasks such as converting data into different units of measurement, communicating with other machines, recording statistics and feedback, and simply shutting off devices if a safety or performance issue arises. IoT functionality can track and analyze production quotas, consolidate control rooms, and create models of predictive maintenance. Machines could increasingly be able to self-report problems, provide insight on ways to improve efficiency, and generate feedback on product functionality and consumer usage. A report published last December by market research firm IoT Analytics found that the three main applications of industrial analytics in the near future will be predictive and prescriptive maintenance of machines, consumer marketing-related analytics, and the analysis of product usage in the field. The report also found that companies using these analytics increase their revenue, customer satisfaction, and product quality while optimizing their supply chains. Digitizing operations could allow them to offer automatic order fulfillment when product levels are low and even to minimize unexpected service interruptions.

“If you think about any process in the manufacturing environment, there are many barometers you need to manage to have a process that delivers the right value-add you’re looking for,” says Barbier. “What we call ‘smart’ or ‘IoT’ is just one of those barometers that you need delivered on a real-time basis.” He notes that the IoT allows us to get the right information at the right time to make the right decisions, likening it to a speedometer that shows how fast you’re driving in the moment instead of your speed from the day before. Cloud computing enables companies to extract and analyze information that affects the production line.

The real utility is not just about the amount of data collected but its quality. Barbier believes that “deep” data is what matters most, noting that simply “capturing information without doing anything is meaningless. It’s very important to gather a lot of data, but it’s more important to have the right data to take the right action.” Deep data could uncover consumer insights that create an increase in regional manufacturing. It can also connect multiple factories by region, share movable assets, and reduce time and waste. Real-time flexibility promises to conserve energy, while smart power grids create production schedules that observe peak- and low-demand periods. Data from augmented and virtual reality, as well as increased customer feedback, will have a significant impact on research and development, giving consumers more of what they want, getting it to them faster, and cutting down on costs—a system that ultimately will drive innovation.

5. Robots on the Rise—Managed by Humans

Building a better manufacturing sector with augmented and virtual reality, robotics, and data analysis using smart equipment naturally raises an important question: What will the Industry 4.0 workforce look like? While there are still some significant challenges ahead, the outlook is strong in spite of the obvious concern of robots stealing jobs. “The vast majority of automation technology will not outright replace humans; instead, it will simply make their work more efficient,” wrote Jim Rock, the CEO of the vision-guide industrial vehicle company Seegrid, in TechCrunch last year. He added that automation also leads to better customer service and creates new demand. “That new demand will ensure that the more-competitive American companies of the future will continue to thrive—even if the world looks different than it does today.”

Barbier agrees, noting that the bulk of automation is used for work that would be considered unsafe, too imprecise, or simply impossible for humans to perform, such as those that involve toxic fumes, extreme temperatures, or that demand an acute level of precision.

This makes robots a complement to, not a replacement for, human workers. Because of robots, “we’ll be able to increase our output,” he says. “The jobs that are going to be taken over by automation are actually going to be replaced with additional product volume and categories. We will need people who are able to manage these new operations, manage the robotics, to program them and maintain them. People who used to produce things with their hands, they’ll start to produce things with their brains. You’ll have to take care of the information that you’re going to get out of this automated equipment and interpret what you can do with that information. I believe there are lot of different categories of experts and skilled people we’ll need for designing, building, and using the automation.”

Just as there was a shift from farmwork to factory work in the early 20th century, almost every sector will need new kinds of workers: those who can build hardware, software, and firmware; those who can design automation and robotics; and those who can adapt and maintain new equipment. For his TechCrunch article, Rock also noted, “Customer support, accounting, tax preparation, web design, computer programming, data entry, R&D, and legal services—all of which are commonly outsourced today—will benefit from rapidly advancing automation technology that makes their work far more efficient.”

Two key roles in the Industry 4.0 world are likely to be algorithm specialists and software architects, both of which will be necessary to stabilize supply chains and synchronize operations. “To really drive development, two competencies must come together,” Siegfried Dais, deputy chairman of the board of management at the engineering and electronics company Bosch, said in an interview with McKinsey & Company. “First, we need to recognize the change potential, value creation, and cost reductions we can achieve if we apply what’s actually ‘new’ about new technologies.... The second competency is finding people who are able to design robust algorithms, those who make the system user-friendly so that the people who use it day to day can immediately recognize problems and know how to react without getting tangled up in a web of interdependencies.”

Designing useful algorithms and software that capture, process, interpret, and predict information is key to success in the digital manufacturing age. Flex is already utilizing these kinds of complex tools to inform procedures in the U.S. and abroad. It’s a change that will necessitate new kinds of training and educational programs, but as the IoT has already been influencing enterprise in fields such as medicine and business, it’s not hard to imagine that the manufacturers of the future will readily prepare workers for the challenges ahead.

Looking Ahead

As with any significant transition, Industry 4.0 faces several hurdles before it can truly take hold globally. Security breaches are one of the top concerns for companies innovating in the manufacturing sector, and keeping up with the security requirements that come from collecting vast amounts of data is no small task. According to a 2016 survey about Industry 4.0 conducted by the consulting firm PwC, 40% of respondents said that liability risks through data loss is their main concern in terms of data security.

The smart manufacturing infrastructure—which includes hardware, software, algorithms, maintenance, and training—will likely undergo significant changes. A feature in Strategy + Business titled “A Strategist’s Guide to Industry 4.0” reported that “making Industry 4.0 work requires major shifts in organizational practices and structures. These include new forms of IT architecture and data management, new approaches to regulatory and tax compliance, new organizational structures, and most important—a new digitally oriented culture, which must embrace data analytics as a core enterprise capability.” Based on the successes and integrations already occurring, however, it seems that the industry is up to the challenge.

With increased efficiency, more jobs, and growing profits, the future of American manufacturing is looking bright. David Friedman, the former assistant secretary for the U.S. Office of Energy Efficiency and Renewable Energy, in an interview with radio station KPCC in June 2016, said that a shift to smart manufacturing will “save our businesses money, which is going to translate into more profits and more jobs, which is going to translate into a stronger manufacturing sector.” Under any administration, this philosophy should hold true. As our machines move into a more complex age, so do our workers and products, symbiotically growing into a new era of production.